scholarly journals Economic Modelling of the Delay in Passing the Petroleum Industry Bill in Nigeria and Its Impact on Deep Offshore Investments and Government Take Statistics

2020 ◽  
Author(s):  
Oghenerume Ogolo ◽  
Petrus Nzerem
Keyword(s):  
Petroleum Industry ◽  
Economic Models ◽  
Economic Modelling ◽  
Government Revenue ◽  
Production Sharing ◽  
The Government ◽  
Petroleum Sector ◽  
The Impact ◽  
Offshore Region

Abstract The petroleum industry bill (PIB) in Nigeria aims to reform the petroleum sector of the country and increase government revenue from petroleum investments. Despite the benefits the bill offers to the country, its passage has suffered several setbacks. This research therefore studied the impact of the delay in passing the bill on deep offshore investments. Economic models were built using the fiscal terms in PIB 2009 and 1993 production sharing contract (PSC) arrangement to evaluate the impact of the bill. The model with the 1993 PSC fiscal terms was adjusted to capture the delay in passing the bill. The bill was assumed to be passed on a yearly basis for 10 years (2010 to 2019). The impact of the delay in passing the bill based on the reserve portfolio of firms in the deep offshore region of the country was also evaluated. The delay in passing the PIB reduced the government take. It was seen that for the non-passage of the bill, the government lost about $1227.2 MM. When the bill was passed in 2019, the government had been losing about $11.843 MM on a yearly basis due to the delay in passing the bill.

scholarly journals Changes in Crude Oil Prices and the Flow of Government Revenue

2019 ◽  
pp. 1-12
Author(s):  
Chukwunweike Stella ◽  
Achu Tonia Chinedu ◽  
Awa Kalu Idika
Keyword(s):  
Oil Prices ◽  
Oil Price ◽  
Government Revenue ◽  
Distributed Lag ◽  
Autoregressive Distributed Lag ◽  
Oil Revenue ◽  
Crude Oil Prices ◽  
Regression Techniques ◽  
The Government ◽  
The Impact

This work is set out as an investigation into the impact of change in oil prices on government revenue broken into oil and nonoil component. Drawing data from the Central Bank Statistical Bulletin and covering the period 1981 to 2018. The Autoregressive Distributed Lag (ARDL) Model was used because of its advantages over other regression techniques. It was found that changes in oil price affected oil revenue within the studied period leaving no significant impact on nonoil revenue. The result obviously reflects the Nigerian economy and its mono-product characteristic. It is therefore recommended that a conscious policy effort should be made to diversify the economy in a manner that makes revenue to the government multifarious functions.

scholarly journals Exemption of Fiscal Exit Tax: Its Impact on International Flights and Tax Revenue

2015 ◽  
Vol 16 (1) ◽  
pp. 22
Author(s):  
Joko Mariyono
Keyword(s):  
Income Tax ◽  
Time Series Data ◽  
Personal Income ◽  
Series Data ◽  
Government Revenue ◽  
Personal Income Tax ◽  
Econometric Methods ◽  
Asean Member ◽  
The Government ◽  
The Impact

Fiscal tariff is considered as personal income tax, collected in advance when adult people who have been staying in Indonesia for more than 183 days go overseas. The magnitude of tariff was sometime much greater than the airfare itself, particularly for international flight to ASEAN member countries. This study aims to measure the impact of elimination of fiscal tariff applied to international flight passenger departing from Indonesia. Potential loss in government revenue from income tax and number of international passengers were analyzed. This study used descriptive and econometric methods. Annual and monthly time series data were collected for publication of the Indonesian Statistical Agency and Central Bank of Indonesia during the periods 2008-2012. The results show that the elimination of fiscal tariff did not affect the government revenue resulting from personal income tax. The impact of tariff elimination was to increase the rate in number of passengers going overseas.

The poverty implications of high oil prices in South Africa

2012 ◽  
Vol 17 (3) ◽  
pp. 293-313 ◽  
Author(s):  
Margaret Chitiga ◽  
Ismael Fofana ◽  
Ramos Mabugu
Keyword(s):  
South Africa ◽  
Government Policy ◽  
Petroleum Industry ◽  
Policy Instruments ◽  
Oil Prices ◽  
Government Revenue ◽  
Price Increases ◽  
Price Subsidy ◽  
The Government ◽  
Poverty Indicators

AbstractAn energy-focused macro-micro approach is used to assess the poverty implications of government policy response to increases in international oil prices in South Africa. The first scenario assumes that increases in international oil prices are passed on to end users with no changes in government policy instruments. In this scenario, poverty indicators increase. The second scenario assumes that the world price increases are nullified by a price subsidy by the government. This scenario still leads to an increase in poverty as the beneficial price effect is cancelled out by a decline in households’ income induced by the financing method used. While revenue generated from a 50 per cent tax on windfall profit of the petroleum industry helps to minimize the loss in government revenue, it does not contribute to mitigating the increasing poverty trend, since the decline in saving and investment under this scenario restricts the country's growth, employment and income distribution perspectives.

Application of the Delayed Royalty Framework for Onshore Petroleum Investment in Nigeria

2021 ◽  
Author(s):  
Frank Egede ◽  
Oghenerume Ogolo ◽  
Victor Anochie ◽  
Amina Danmadami ◽  
Zephaniah Ajibade
Keyword(s):  
Economic Models ◽  
Payment System ◽  
Oil Price ◽  
Modeling Technique ◽  
Royalty Rate ◽  
Royalty Payment ◽  
Fiscal System ◽  
The Government ◽  
The Impact

Abstract Nigeria uses the concessionary petroleum fiscal system for onshore investment in the country where the ownership of the hydrocarbon resources belongs to the contractor's. The government then gets her revenue through payment of royalties and taxes. A fixed royalty rate of 20% is specified for onshore petroleum investment in the country. This kind of royalty payment system is regressive in nature and affects the sustainability of E&P firms during period of low oil price. This research considered the incorporation of a delayed royalty framework into the concessionary petroleum fiscal system in Nigeria. Two economic models were built to evaluate upstream petroleum investment in Nigeria onshore environment using the spreadsheet modeling technique. The delayed royalty framework was incorporated into one of the model. The delay in royalty payment was made as a function of the time it takes the contractor to recoup his capital before payment of royalty and taxes. Oil price was varied in the model between $30-$90/bbl to see the impact of the delay in royalty payment on the sustainability of the investment under the delayed royalty framework. It was observed that the delayed royalty framework made the contractor to recoup his capital early during the life of the investment. It also increased the contractor's revenue which will help to increase the sustainability of the investment during period of low oil price.

OP11 Structural Uncertainty In Economic Modelling For Smoking Cessation

2017 ◽  
Vol 33 (S1) ◽  
pp. 6-7
Author(s):  
Becky Pennington ◽  
Alex Filby ◽  
Matthew Taylor ◽  
Lesley Owen
Keyword(s):  
Smoking Cessation ◽  
Cost Effectiveness ◽  
Recurrent Events ◽  
Smoking Status ◽  
Discrete Event ◽  
Economic Models ◽  
Economic Modelling ◽  
Model Structure ◽  
Cohort Model ◽  
The Impact

INTRODUCTION:Guidance for developing economic models recommend that model structure is carefully considered, and assumptions varied in sensitivity analysis (1). Models in smoking cessation have typically used cohort-level approaches, although recently discrete event simulations (DESs) have been developed (2). DESs allow additional flexibility such as modelling changing risk over time, and recurrent events. Our aim was to explore the impact of varying model structure and assumptions on the cost-effectiveness of smoking cessation programs.METHODS:We built a cohort state-transition model which related mortality to smoking status and considered the prevalence (based on smoking status) of five comorbidities associated with smoking, each of which has an associated cost and quality of life decrement. We additionally built a patient-level DES, using the Discretely Integrated Condition Event framework (3). The DES used the same data as the cohort model, except considering incidence for comorbidities rather than prevalence. We considered a population of smokers aged 16 years old and an intervention costing GBP827 on which 27 percent of people quit, compared with no treatment. We produced results using the two models for comparable scenarios, and ran additional scenarios considering different assumptions.RESULTS:In the cohort model, the incremental cost-effectiveness ratio (ICER) for intervention versus no treatment was GBP4,000/quality-adjusted life year (QALY). In the DES, modelling mortality linked to smoker status produced an ICER of GBP1,000/QALY and modelling mortality linked to comorbidities produced an ICER of GBP6,000/QALY. In the DES with mortality linked to comorbidities, varying the relative risk of comorbidities with time since quitting gave an ICER of GBP3,000/QALY. Including relapse increased the ICER to GBP21,000/QALY.CONCLUSIONS:The ICER for the smoking cessation program changes when model assumptions are varied, although the choice of DES versus cohort model appears to make a relatively small difference. Inclusion of relapse substantially changes the ICER, demonstrating the importance of long-term effects in economic models.

PRODUCTION SHARING AGREEMENTS VERSUS THE ROYALTY REGIMES: WHERE IS THE BALANCE?

1992 ◽  
Vol 32 (1) ◽  
pp. 481
Author(s):  
Richard Cottee
Keyword(s):  
Petroleum Industry ◽  
Mining Industry ◽  
Third Party ◽  
Petroleum Exploration ◽  
Veto Power ◽  
Regulatory Regime ◽  
Fixed Rate ◽  
Regulatory Scheme ◽  
Production Sharing ◽  
The Government

For many years the mining industry made its investment decisions safe in the knowledge that petroleum or minerals in the ground belonged to the State but upon severance of such petroleum from the ground the oil was vested in the miner. Commensurate with the ownership changing, a royalty was payable to the government at a fixed rate. With the enactment of the Petroleum (Australia-Indonesia Zone of Co-Operation) Act of 1990 (the 'Act'), serious consideration must now be given as to whether in the future this basic scheme may be dramatically and radically changed to a scheme based on a services contract whereby a certain percentage of the oil is paid in consideration of the miner 'managing the discovery and extraction of petroleum'.An increasing number of countries, including those such as Malaysia which have legal systems based on common law, have adopted petroleum sharing agreements as a basic method by which they 'encourage' petroleum exploitation. This paper:explores the major features of petroleum sharing agreements (which are now in use in the Timor Gap, Indonesia and Malaysia), and compares and contrasts those models with a regulatory scheme based on statutory leases with royalty payments (being the regulatory scheme used in Australia, New Zealand, Canada and elsewhere);reviews both the economic and legal consequences of the two regimes, assuming a constant Income Tax System.It concludes that whilst there are certain merits in both the royalty regulatory type regime and a production sharing regime it appears to the writer that on balance the royalty regulatory regime is much more beneficial to the industry than the alternate. This is particularly true given the fact that Australian governments generally should have sufficient confidence in their regulatory skills and Australian technology that it does not feel it necessary to be given a veto power for each and every decision made in respect of petroleum exploration or production.The major deficiencies of a production sharing arrangement are the fact that the risk taker does not obtain legal tide to the product until after it has either passed the point of tanker loading or been sold to some third party, and the concept of 'cost oil'. If the rates of government 'take' is so high that it is more profitable to obtain 'cost oil' for the company than to receive its 'share' under the production sharing agreement, then the petroleum industry as a whole will suffer gross inefficiency in that area.

A critical examination of the role of public participation in petroleum development contract in Nigeria*

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Job Ohioma Odion
Keyword(s):  
Public Participation ◽  
Petroleum Industry ◽  
Secondary Data ◽  
Critical Examination ◽  
Content Type ◽  
Oil Companies ◽  
The Government ◽  
Petroleum Sector ◽  
Petroleum Development

Purpose The topic is examined with a view to ascertaining the various methods by which indigenous oil companies can participate in petroleum development contract in Nigeria. Also, the raison d’etre of the policy will be considered to see whether the government has achieved its primary aim and how successive government has approach the issue with a view to determining the best policy to adopt. The challenges facing this policy will be considered with a view to unfold whether the Petroleum Industry Bill proffers solution. Design/methodology/approach This methodology of research is doctrinaire and analytical. The author used the available statute and case law in extrapolation of the views expressed in this paper; where necessary, secondary data as sourced from existing literature was used. Findings This paper revealed that the existing laws in Nigeria do not support public participation in the petroleum sector. so much is in the hands of the government. The paper also found that this government's monopoly of the sector is one of the reasons for the slow level of development in the sector. Originality/value This paper is original to the extent that it focusses on a relatively new area of public participation in the upstream petroleum sector in Nigeria. Most papers have often focussed on the downstream sector; however, this study seeks to re-direct the debate to the upstream sector.

FISCAL Optimizations to Achieve a Win-Win Gross Split Production Sharing Contract on Deep-Water Study Case Project

2021 ◽  
Author(s):  
A. H. Sasoni
Keyword(s):  
Net Present Value ◽  
Oil And Gas ◽  
Economic Modelling ◽  
Effective Tax Rate ◽  
Tax Rate ◽  
Field Development ◽  
Production Sharing ◽  
Cumulative Production ◽  
The Government ◽  
One Year

Indonesia has adopted a new oil and gas fiscal system called Gross Split PSC (Production Sharing Contract). The objective is to implement a better system for developing oil and gas projects in Indonesia, which will empower the government to secure a higher government take (GT) from the early stages of production and reduce bureaucracy for contractors. This individual project compares the new PSC scheme and the Traditional PSC system using deterministic sensitivity analysis to determine the most optimal fiscal terms under the Gross Split PSC. The discussion includes profitability index, such as the government’s share of gross revenue (GSGR), project’s net present value (NPV) and the internal rate of return (IRR). The work was carried out from both the contractor’s and government’s perspective in an Indonesian Petroleum Association (IPA) simulation gas case study field development in deep offshore. The results of the economic modelling analysis provides that Gross Split PSC will have the same IRR as the Traditional PSC if the project is accelerated for one year, receives a 5% deductible effective tax rate and gets an additional progressive split of cumulative production.

scholarly journals The Need for Theory in Actuarial Economic Models

1999 ◽  
Vol 5 (2) ◽  
pp. 377-395 ◽  
Author(s):  
P.P. Huber ◽  
R.J. Verrall
Keyword(s):  
Financial Economics ◽  
Theoretical Approach ◽  
Economic Models ◽  
Theoretical Framework ◽  
Empirical Approach ◽  
Specific Reference ◽  
Economic Modelling ◽  
Empirical Testing ◽  
The Uk ◽  
The Impact

ABSTRACTThis paper addresses the fundamental issues in the construction and use of actuarial economic models, with specific reference to those described in the UK literature. Two approaches are considered: an empirical approach and a theoretical approach using financial economics. Although empirical testing is essential, the difficulties associated with it should not be underestimated. A theoretical framework can be used to limit the impact of these difficulties. However, economic modelling is further complicated by the lack of a reliable and comprehensive theoretical framework. This suggests that economic models are always likely to be inaccurate and consequently actuarial judgement is likely to be indispensable.

A business model to overcome barriers to entry in the South African downstream petroleum industry

2005 ◽  
Vol 16 (2) ◽  
pp. 4-13 ◽  
Author(s):  
JKJ Mokoena ◽  
PJD Lloyd
Keyword(s):  
South African ◽  
Market Share ◽  
Petroleum Industry ◽  
Barriers To Entry ◽  
The South ◽  
Policy Objective ◽  
Oil Companies ◽  
Key Policy ◽  
The Government ◽  
The Impact

The South African downstream petroleum industry was in the hands of Whites and Multinational Oil Companies during the apartheid era. Many Historically Disadvantaged South Africans (HDSA’s) were excluded from the mainstream industry through, among other instruments, laws passed by the government such as the Petroleum Products Act 120 of 1977. Against this background, the newly elected democratic government instituted a policy process aimed at restructuring and transforming the petroleum industry to allow HDSA’s to enter the industry, in order to achieve sustainable presence, ownership and control of approximately a quarter of the industry by previously disadvantaged individuals. Since the introduction of this process, which culminated in the release of the White Paper on the Energy Policy of the Republic of South Africa (1998), little progress has been made towards achieving this government’s key policy objective. Instead, there is still little entry into the industry by HDSA’s, and the Black Oil Companies (BOC’s) that are in the industry continue to struggle to increase their market share. This paper discusses the possible constraints on achieving the objective, by looking at barriers that impede HDSA’s from entering the industry and BOC’s from increasing their market share significantly. There are three possible categories of barriers in the downstream petroleum industry, namely, economic barriers to entry, noneconomic barriers, and cross-sectoral barriers to entry, which are discussed in this paper. These categories of barriers prevent entry by HDSA’s into the industry and hinder BOC’s from increasing their market share. To circumvent these barriers, and in order to make progress towards achieving the government’s key policy objective of control by approximately a quarter of the HDSA’s, a black economic empowerment model was developed. This model seeks to increase the market share of the BOC’s and the presence of the HDSA’s in the industry in a sustainable way without significantly harming the multinational oil companies. It foresees Government licensing BOC’s to purchase up to 5% of the existing South African fuel demand at an Import Parity Price (IPP) that is significantly less than the Basic Fuel Price (BFP). The reason for this difference is that the BFP is based upon the supply of the totality of South Africa’s needs from elsewhere, whereas the IPP merely supplies up to 5% of South Africa’s needs, and can therefore source the product from refineries that are closer, so reducing the transport component. The impact of the loss of 5% of the internal market for petrol and diesel on the revenues of the MOC’s is less than 0.5%, because the difference between the IPP and BFP is a small fraction of the BFP. 

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